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Last updated on April 23, 2014 at 21:24 EDT

Global Payments Reports Second Quarter Earnings for Fiscal 2013

January 8, 2013

ATLANTA, Jan. 8, 2013 /PRNewswire/ — Global Payments Inc. (NYSE: GPN), a leading, worldwide provider of electronic transaction processing solutions, today announced results for its fiscal second quarter ended November 30, 2012.

(Logo: http://photos.prnewswire.com/prnh/20010221/ATW031LOGO)

Second Quarter 2013 Summary

  • Revenue grew 11% to $588.5 million compared to $530.5 million in the second quarter of 2012.
  • Cash diluted earnings per share[1] grew 8% to $0.93 compared to $0.86 in the second quarter of 2012.
  • GAAP diluted earnings per share were $0.89, compared to $0.78 in the second quarter of 2012.

Chairman and CEO Paul R. Garcia said, “We are pleased with our solid performance in the quarter and the recent completion of the two previously announced acquisitions, Accelerated Payment Technologies in October, and the remaining 44% ownership interest in the Asia-Pacific joint venture from HSBC in December. We have also increased our full-year cash EPS expectation to a range of $3.61 to $3.68.

“Additionally, I am delighted to announce that we have essentially completed our remediation work as anticipated and the required documentation is in the process of being provided to the Qualified Security Assessor for verification. This verification allows the Networks to evaluate the results and return us to the list of PCI compliant service providers,” concluded Garcia.

Share Repurchase Authorization

The Board of Directors approved an additional $150 million share repurchase authorization of Global Payments’ stock which increased the current $150 million share repurchase authorization to a total of $300 million. As of January 8, 2013, $287 million remains available. Under this program, Global Payments may repurchase shares in the open market or as otherwise may be determined by the company, subject to market conditions, business opportunities and other factors. Repurchased shares will be retired but will be available for future issuance.

David Mangum, Senior Executive Vice President and CFO, stated, “We are pleased with the increase in the share repurchase authorization and we expect to execute on our buyback plans. With the recently increased financing capacity we completed in the second quarter of 2013, we have significant capital flexibility to drive organic growth, acquisitions and on-going share repurchases.”

Acquisition Closings and Funding

Global Payments closed the Accelerated Payment Technologies (APT) acquisition for $413 million on October 1, 2012. APT is an innovative provider of fully-integrated payment technology solutions for small to medium sized merchants. The company also closed on a new five-year senior unsecured term loan facility of $700 million and increased its existing senior unsecured revolving credit facility by $150 million. In addition, effective December 1, 2012, the company completed its previously announced acquisition of the remaining 44% ownership interest in the Asia-Pacific joint venture for $242 million. Global Payments will continue to be HSBC’s preferred strategic partner for card acquiring services in Asia-Pacific, covering 11 markets.

2013 Outlook

For the full-year of fiscal 2013, the company continues to expect annual revenue of $2,360 million to $2,400 million, or 7% to 9% growth over fiscal 2012.

Annual expectations for fiscal 2013 diluted earnings per share on a cash basis are now increased to a range of $3.61 to $3.68, or growth of 2% to 4% over fiscal 2012. On a constant currency basis, the company continues to expect revenue to grow 8% to 10% and diluted earnings per share on a cash basis to grow 5% to 7%.

Annual fiscal 2013 GAAP diluted earnings per share, excluding the impact of all intrusion remediation costs, are expected to be in a range of $3.01 to $3.08.

Both cash and GAAP diluted earnings per share expectations exclude the impact of any potential future share repurchases.

For reconciliation of Cash Earnings to GAAP and constant currency, see schedule 9.

Conference Call

Global Payments will hold a conference call today, January 8, 2013 at 5:00 p.m. EST to discuss financial results and business highlights. Callers may access the conference call via the investor relations page of the company’s website at www.globalpaymentsinc.com by clicking the “Webcast” button; or callers in North America may dial 1-888-895-3550 and callers outside North America may dial 1-706-758-8809. The pass code is “GPN.” A replay of the call may be accessed through the Global Payments website through January 21, 2013.

About Global Payments

Global Payments Inc. (NYSE:GPN) is a leading provider of electronic transaction processing services for merchants, Independent Sales Organizations (ISOs), financial institutions, government agencies and multi-national corporations located throughout the United States, Canada, Europe and the Asia-Pacific region. Global Payments, a Fortune 1000 company, offers a comprehensive line of processing solutions for credit and debit cards, business-to-business purchasing cards, gift cards, electronic check conversion and check guarantee, verification and recovery including electronic check services, as well as terminal management. Visit www.globalpaymentsinc.com for more information about the company and its services.

This announcement and comments made by Global Payments’ management during the conference call may contain certain forward-looking statements within the meaning of the “safe-harbor” provisions of the Private Securities Litigation Reform Act of 1995. Statements that are not historical facts, including revenue and earnings estimates and management’s expectations regarding future events and developments, are forward-looking statements and are subject to significant risks and uncertainties. Important factors that may cause actual events or results to differ materially from those anticipated by such forward-looking statements include the following: the effect on our results of operations of the remediation efforts resulting from the unauthorized access to our processing system announced in March 2012; foreign currency risks which become increasingly relevant as we expand internationally; the effect of current domestic and worldwide economic conditions, including sovereign insolvency situations and a decline in the value of the U.S. dollar, and future performance and integration of acquisitions including APT, and other risks detailed in the company’s SEC filings, including the most recently filed Form Form 10-K, as applicable. The company undertakes no obligation to revise any of these statements to reflect future circumstances or the occurrence of unanticipated events.

(([1]))( )See Schedule 2 for Cash Earnings and Schedules 6 and 7 for Reconciliations of Cash Earnings to GAAP.

    Investor contact: investor.relations@globalpay.com   Media contact: media.relations@globalpay.com
    Jane
     Elliott                              Kay Sharpton Amy Corn
    770-829-8234                          770-829-8870 770-829-8755
    SCHEDULE 1
    GAAP CONSOLIDATED STATEMENTS OF INCOME
    GLOBAL PAYMENTS INC. AND SUBSIDIARIES

    (In thousands, except per share data)
    ------------------------------------

                                                                          Three Months Ended November 30,               Six Months Ended November 30,
                                                                          -------------------------------               -----------------------------
                                                                                                        2012      2011             % Change                  2012        2011  % Change
                                                                                                        ----      ----             --------                  ----        ----  --------
                                                                                    (unaudited)

    Revenues                                                                                        $588,538  $530,505                             11% $1,178,825  $1,073,276             10%
    --------                                                                                        --------  --------                            ---  ----------  ----------            ---

    Operating expenses:
         Cost of service                                                                             210,268   185,931                             13%    414,659     377,467             10%
         Sales, general and administrative                                                           276,177   247,994                             11%    557,596     490,619             14%
         Processing system intrusion                                                                 (14,489)        -                             NM       9,500           -             NM
                                                                                                     471,956   433,925                              9%    981,755     868,086             13%
                                                                                                     -------   -------                                    -------     -------

    Operating income                                                                                 116,582    96,580                             21%    197,070     205,190            (4%)
    ----------------                                                                                 -------    ------                            ---     -------     -------            ---

    Other income (expense):
         Interest and other income                                                                     2,187     2,259                            (3%)      4,170       4,760           (12%)
         Interest and other expense                                                                  (14,609)   (4,878)                           199%    (18,154)     (8,965)           102%
                                                                                                     -------    ------                                    -------      ------
                                                                                                     (12,422)   (2,619)                           374%    (13,984)     (4,205)           233%
                                                                                                     -------    ------                                    -------      ------

    Income before income taxes                                                                       104,160    93,961                             11%    183,086     200,985            (9%)
    Provision for income taxes                                                                       (28,789)  (25,812)                            12%    (53,553)    (60,755)          (12%)
                                                                                                     -------   -------                                    -------     -------
    Net income                                                                                        75,371    68,149                             11%    129,533     140,230            (8%)
    Less: Net income attributable to noncontrolling interests, net of tax                             (5,188)   (6,968)                          (26%)    (12,675)    (15,075)          (16%)
                                                                                                      ------    ------                                    -------     -------
              Net income attributable to Global Payments                                             $70,183   $61,181                             15%   $116,858    $125,155            (7%)
                                                                                                     -------   -------                                   --------    --------

    Earnings per share attributable to Global Payments:
              Basic                                                                                    $0.89     $0.78                             14%      $1.49       $1.58            (6%)
              Diluted                                                                                  $0.89     $0.78                             14%      $1.48       $1.57            (6%)

    Weighted average shares outstanding:
              Basic                                                                                   78,751    78,348                                     78,669      79,207
              Diluted                                                                                 79,144    78,876                                     79,062      79,831

    NM - Not Meaningful
    SCHEDULE 2
    CASH EARNINGS ATTRIBUTABLE TO GLOBAL PAYMENTS
    GLOBAL PAYMENTS INC. AND SUBSIDIARIES

    (In thousands, except per share data)
    ------------------------------------

                                                                          Three Months Ended November 30,                Six Months Ended November 30,
                                                                          -------------------------------                -----------------------------
                                                                                                         2012      2011             % Change                  2012        2011  % Change
                                                                                                         ----      ----             --------                  ----        ----  --------

    Revenues                                                                                         $588,538  $530,505                             11% $1,178,825  $1,073,276             10%
    --------                                                                                         --------  --------                            ---  ----------  ----------            ---

    Operating expenses:
         Cost of service                                                                              195,932   173,778                             13%    388,937     352,671             10%
         Sales, general and administrative                                                            276,177   247,994                             11%    556,796     490,619             13%
                                                                                                      472,109   421,772                             12%    945,733     843,290             12%
                                                                                                      -------   -------                                    -------     -------

    Operating income                                                                                  116,429   108,733                              7%    233,092     229,986              1%
    ----------------                                                                                  -------   -------                            ---     -------     -------            ---

    Other income (expense):
         Interest and other income                                                                      2,187     2,259                            (3%)      4,170       4,760           (12%)
         Interest and other expense                                                                    (6,226)   (4,878)                            28%     (9,771)     (8,965)             9%
                                                                                                       ------    ------                                     ------      ------
                                                                                                       (4,039)   (2,619)                            54%     (5,601)     (4,205)            33%
                                                                                                       ------    ------                                     ------      ------

    Income before income taxes                                                                        112,390   106,114                              6%    227,491     225,781              1%
    Provision for income taxes                                                                        (29,385)  (29,569)                           (1%)    (65,938)    (68,251)           (3%)
                                                                                                      -------   -------                                    -------     -------
    Net income                                                                                         83,005    76,545                              8%    161,553     157,530              3%
    Less: Net income attributable to noncontrolling interests, net of tax                              (9,419)   (8,913)                             6%    (19,171)    (19,085)             0%
                                                                                                       ------    ------                                    -------     -------
    Net income attributable to Global Payments                                                        $73,586   $67,632                              9%   $142,382    $138,445              3%
                                                                                                      -------   -------                                   --------    --------

    Basic earnings per share                                                                            $0.93     $0.86                              8%      $1.81       $1.75              3%
                                                                                                        -----     -----                                      -----       -----

    Diluted earnings per share                                                                          $0.93     $0.86                              8%      $1.80       $1.73              4%
                                                                                                        -----     -----                                      -----       -----

    Weighted average shares outstanding:
              Basic                                                                                    78,751    78,348                                     78,669      79,207
              Diluted                                                                                  79,144    78,876                                     79,062      79,831

    NM - Not Meaningful

    See Schedules 6 and 7 for a reconciliation of cash earnings to GAAP.
    SCHEDULE 3
    SEGMENT INFORMATION
    GLOBAL PAYMENTS INC. AND SUBSIDIARIES

    (In thousands)
    -------------

                                                                                                                                       Three Months Ended November 30,
                                                                                                                                      -------------------------------
                                                                                                                                                           2012                                           2011                           % Change
                                                                                                                                                           ----                                           ----                           --------
                                                                                                                                             GAAP                                           Cash                                           GAAP                                           Cash                                     GAAP                                 Cash
                                                                                                                                                                                          Earnings                                                                                      Earnings                                                                      Earnings
                                                                                                                                                                                          --------                                                                                      --------                                                                      --------

                          Revenues:
                          ---------
                          United States                                                                 $339,998                                       $339,998                                       $293,416                                       $293,416                                             16%                                16%
                          Canada                                                         80,770                       80,770                                         85,521                                         85,521                                            (6%)                                           (6%)

                           North America merchant
                           services                                                    420,768                      420,768                                        378,937                                        378,937                                             11%                                            11%

                          Europe                                                        131,161                      131,161                                        115,169                                        115,169                                             14%                                            14%
                          Asia-Pacific                                                   36,609                       36,609                                         36,399                                         36,399                                              1%                                             1%

                           International merchant
                           services                                                    167,770                      167,770                                        151,568                                        151,568                                             11%                                            11%

                                             Total revenues                                             $588,538                                       $588,538                                       $530,505                                       $530,505                                             11%                                11%
                                                                                                        ========                                       ========                                       ========                                       ========

                          Operating income:
                          -----------------
                          North America merchant services                                               $67,114                                        $73,280                                        $70,673                                        $73,495                                            (5%)                               (0%)
                          International merchant services                               53,987                       62,157                                         44,494                                         53,825                                             21%                                            15%
                          Corporate(1)                                                   (4,519)                     (19,008)                                       (18,587)                                       (18,587)                                            76%                                           (2%)
                                             Operating income                                           $116,582                                       $116,429                                        $96,580                                       $108,733                                             21%                                 7%
                                                                                                        ========                                       ========                                        =======                                       ========

                                                                                                                                      Six Months Ended November 30,
                                                                                                                                     -----------------------------
                                                                                                                                                           2012                                           2011                           % Change
                                                                                                                                                           ----                                           ----                           --------
                                                                                                                                             GAAP                                       Cash Earnings                                      GAAP                                       Cash Earnings                                GAAP                             Cash Earnings
                                                                                                                                             ----                                      -------------                                       ----                                      -------------                                 ----                            -------------

                          Revenues:
                          ---------
                          United States                                                                 $685,896                                       $685,896                                       $580,841                                       $580,841                                             18%                                18%
                          Canada                                                        161,667                      161,667                                        176,742                                        176,742                                            (9%)                                           (9%)

                           North America merchant
                           services                                                    847,563                      847,563                                        757,583                                        757,583                                             12%                                            12%

                          Europe                                                        259,626                      259,626                                        244,583                                        244,583                                              6%                                             6%
                          Asia-Pacific                                                   71,636                       71,636                                         71,110                                         71,110                                              1%                                             1%

                           International merchant
                           services                                                    331,262                      331,262                                        315,693                                        315,693                                              5%                                             5%

                                             Total revenues                          $1,178,825                   $1,178,825                                     $1,073,276                                     $1,073,276                                             10%                                            10%
                                                                                     ==========                   ==========                                     ==========                                     ==========

                          Operating income:
                          -----------------
                          North America merchant services                                              $134,331                                       $144,723                                       $142,431                                       $148,111                                            (6%)                               (2%)
                          International merchant services                              111,127                      127,201                                        100,152                                        119,268                                             11%                                             7%
                          Corporate(1)                                                  (48,388)                     (38,832)                                       (37,393)                                       (37,393)                                          (29%)                                           (4%)
                                             Operating income                                           $197,070                                       $233,092                                       $205,190                                       $229,986                                            (4%)                                 1%
                                                                                                        ========                                       ========                                       ========                                       ========

    (1)Fiscal 2013 GAAP amounts include a processing intrusion credit of $14.5 million for the three months ended November 30, 2012 and processing system intrusion costs of $9.5 million for the six months ended November 30, 2012.

    See Schedule 8 for reconciliation of cash earnings segment information to GAAP.
    SCHEDULE 4
    CONSOLIDATED BALANCE SHEETS
    GLOBAL PAYMENTS INC. AND SUBSIDIARIES

    (In thousands)
    -------------

                                                                                                    November 30,            May 31,
                                                                                                                       2012               2012
                                                                                                                       ----               ----
                                                                                                    (unaudited)
    ASSETS
    Current assets:
    Cash and cash equivalents                                                                                      $998,261           $781,275
    Accounts receivable, net of allowances for doubtful accounts of $833 and $532, respectively                     183,256            182,962
    Claims receivable, net of allowance for losses of $3,786 and $3,435, respectively                                   968              1,029
    Settlement processing assets                                                                                    237,640            217,994
    Inventory                                                                                                        14,147              9,864
    Deferred income taxes                                                                                             6,464             21,969
    Prepaid expenses and other current assets                                                                        49,184             33,646
    Total current assets                                                                                          1,489,920          1,248,739
                                                                                                                  ---------          ---------

    Goodwill                                                                                                      1,059,520            724,687
    Other intangible assets, net of accumulated amortization of $267,956 and $235,296, respectively                 416,170            290,188
    Property and equipment, net of accumulated depreciation of $179,846 and $161,911, respectively                  338,195            305,848
    Deferred income taxes                                                                                            97,966             97,235
    Other                                                                                                            26,950             21,446
                                                                                                                     ------             ------

    Total assets                                                                                                 $3,428,721         $2,688,143
                                                                                                                 ==========         ==========

    LIABILITIES AND EQUITY
    Current liabilities:
    Lines of credit                                                                                                $212,399           $215,391
    Current portion of long-term debt                                                                               102,425             76,420
    Commitment to purchase redeemable noncontrolling interest                                                       242,000                  -
    Accounts payable and accrued liabilities                                                                        244,499            316,313
    Settlement processing obligations                                                                               228,711            216,878
    Income taxes payable                                                                                              7,436             12,283
      Total current liabilities                                                                                   1,037,470            837,285
                                                                                                                  ---------            -------

    Long-term debt                                                                                                  777,988            236,565
    Deferred income taxes                                                                                           167,365            106,644
    Other long-term liabilities                                                                                      71,097             62,306
    Total liabilities                                                                                             2,053,920          1,242,800
                                                                                                                  ---------          ---------

    Commitments and contingencies

    Redeemable noncontrolling interest                                                                                    -            144,422

    Equity:
    Preferred stock, no par value; 5,000,000 shares authorized and none issued                                            -                  -
    Common stock, no par value; 200,000,000 shares authorized; 78,724,622 and
    78,551,297 issued and outstanding at November 30, 2012 and May 31, 2012, respectively.                                -                  -
    Paid-in capital                                                                                                 257,554            358,728
    Retained earnings                                                                                               957,978            843,456
    Accumulated other comprehensive income (loss)                                                                    18,432            (30,000)
          Total Global Payments shareholders' equity                                                              1,233,964          1,172,184
                                                                                                                  ---------          ---------
    Noncontrolling interest                                                                                         140,837            128,737
    Total equity                                                                                                  1,374,801          1,300,921
                                                                                                                  ---------          ---------

    Total liabilities and equity                                                                                 $3,428,721         $2,688,143
                                                                                                                 ==========         ==========
    SCHEDULE 5
    UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
    GLOBAL PAYMENTS INC. AND SUBSIDIARIES

    (In thousands)
    -------------

                                                                                                                                                                                                      Six Months Ended November
                                                                                                                                                                                                                 30,
                                                                                                                                                                                                     --------------------------
                                                                                                                                                                                                                             2012                                         2011
                                                                                                                                                                                                                             ----                                         ----

    Cash flows from operating activities:
                                                                      Net income                                                                                                        $129,533                                    $140,230
                                                                       Adjustments to reconcile net income to net cash used in operating
                                                                       activities:
                                                                                                                                  26,494                                                                                   23,444
                                                                      Depreciation and amortization of property and equipment
                                                                                                                                  25,561                                                                                   24,796
                                                                      Amortization of acquired intangibles
                                                                                                                                   9,178                                                                                    8,425
                                                                      Share-based compensation expense
                                                                                                                                  11,970                                                                                   13,061
                                                                      Provision for operating losses and bad debts
                                                                                                                                  30,055                                                                                    5,915
                                                                      Deferred income taxes
                                                                                                                                  (2,231)                                                                                    (100)
                                                                      Other, net
                                                                       Changes in operating assets and liabilities, net of the effects
                                                                       of acquisitions:
                                                                                                                                     721                                                                                    3,897
                                                                      Accounts receivable
                                                                                                                                  (6,600)                                                                                  (7,880)
                                                                      Claims receivable
                                                                                                                                 (11,671)                                                                                (499,849)
                                                                      Settlement processing assets and obligations, net
                                                                                                                                  (4,297)                                                                                  (4,212)
                                                                      Inventory
                                                                                                                                 (11,204)                                                                                      62
                                                                      Prepaid expenses and other assets
                                                                                                                                 (67,869)                                                                                 (31,257)
                                                                      Accounts payable and other accrued liabilities
                                                                                                                                  (4,847)                                                                                   9,402
                                                                      Income taxes payable
                                                                                                                                 124,793                                                                                 (314,066)

                                                                      Net cash provided by (used in) operating activities
                                                                      ------------

    Cash flows from investing activities:
                                                                       Business, intangible and other asset acquisitions, net of cash
                                                                       acquired                                                                                                         (409,731)                                     (7,000)
                                                                      Capital expenditures                                                                                               (54,393)                                    (35,146)
                                                                      Net decrease in financing receivables                                                                                1,485                                       1,203
                                                                                                                                (462,639)                                                                                 (40,943)

                                                                      Net cash used in investing activities
                                                                      ------------

    Cash flows from financing activities:
                                                                      Net payments on short-term lines of credit                                                                          (2,992)                                    (45,069)
                                                                      Proceeds from issuance of long-term debt                                                                           910,327                                      71,374
                                                                      Principal payments under long-term debt                                                                           (343,133)                                  (131,345)
                                                                      Payment of debt issuance costs                                                                                      (3,987)                                          -
                                                                      Proceeds from stock issued under employee stock plans                                                                7,080                                        (768)
                                                                      Common stock repurchased - share-based compensation plans                                                          (10,224)                                          -
                                                                      Repurchase of common stock                                                                                         (12,653)                                    (99,604)
                                                                      Tax benefit from employee share-based compensation                                                                   1,791                                       1,436
                                                                      Distribution to noncontrolling interests                                                                            (5,740)                                     (4,660)
                                                                      Dividends paid                                                                                                      (3,153)                                     (3,169)
                                                                                                                                 537,316                                                                                 (211,805)

                                                                      Net cash provided by (used in) financing activities
                                                                      ------------

    Effect of exchange rate changes on cash                                                                                                                                                                                17,516                                      (16,611)
                                                                                                                                                                                                                           ------                                      -------

    Increase (decrease) in cash and cash equivalents                                                                                                                                                                      216,986                                     (583,425)
    Cash and cash equivalents, beginning of period                                                                                                                                                                        781,275                                    1,354,285
    Cash and cash equivalents, end of period                                                                                                                                                                             $998,261                                     $770,860
                                                                                                                                                                                                                         --------                                     --------
    SCHEDULE 6
    RECONCILIATION OF QUARTERLY CASH EARNINGS ATTRIBUTABLE TO GLOBAL PAYMENTS TO GAAP
    GLOBAL PAYMENTS INC. AND SUBSIDIARIES

    (In thousands, except per share data)
    ------------------------------------

                                                                                                                                                                                   Three Months Ended November 30, 2012
                                                                                                                                                                                   ------------------------------------
                                                                                                                                                                               GAAP                                 Processing                             Other(2)                                 Cash                               Cash Earnings
                                                                                                                                                                                                                      System                                                                      Earnings
                                                                                                                                                                                                                    Intrusion                                                                  Adjustments(1)
                                                                                                                                                                                                                    ---------                                                                  -------------

    Revenues                                                                                                                                                                                 $588,538                   $                -                   $                  -                  $                   -                             $588,538
    --------                                                                                                                                                                                 --------                   ------------------                   --------------------                  ---------------------                             --------

    Operating expenses:
       Cost of service                                                                                                                                                                        210,268                                    -                                      -                                (14,336)                             195,932
       Sales, general and administrative                                                                                                                                                      276,177                                    -                                      -                                      -                              276,177
       Processing system intrusion                                                                                                                                                            (14,489)                              14,489                                      -                                      -                                    -
                                                                                                                                                                                              471,956                               14,489                                      -                                (14,336)                             472,109
                                                                                                                                                                                              -------                               ------                                    ---                                -------                              -------

    Operating income                                                                                                                                                                          116,582                              (14,489)                                     -                                 14,336                              116,429
    ----------------                                                                                                                                                                          -------                              -------                                    ---                                 ------                              -------

    Other income (expense):
       Interest and other income                                                                                                                                                                2,187                                    -                                      -                                      -                                2,187
       Interest and other expense                                                                                                                                                             (14,609)                                   -                                  8,383                                      -                               (6,226)
                                                                                                                                                                                                                                       ---                                  -----                                    ---                               ------
                                                                                                                                                                                              (12,422)                                   -                                  8,383                                      -                               (4,039)
                                                                                                                                                                                              -------                                  ---                                  -----                                    ---                               ------

    Income before income taxes                                                                                                                                                                104,160                              (14,489)                                 8,383                                 14,336                              112,390
    Provision for income taxes                                                                                                                                                                (28,789)                               5,000                                 (1,383)                                (4,213)                             (29,385)
                                                                                                                                                                                              -------                                -----                                 ------                                 ------                              -------
    Net income                                                                                                                                                                                 75,371                               (9,489)                                 7,000                                 10,123                               83,005
    Less: Net income attributable to noncontrolling interests, net of tax                                                                                                                      (5,188)                                   -                                 (2,853)                                (1,378)                              (9,419)
                                                                                                                                                                                               ------                                  ---                                 ------                                 ------                               ------
    Net income attributable to Global Payments                                                                                                                                                $70,183                              $(9,489)                                $4,147                                 $8,745                              $73,586
                                                                                                                                                                                              =======                              =======                                 ======                                 ======                              =======

    Diluted shares                                                                                                                                                                             79,144                                                                                                                                                  79,144
    Diluted earnings per share                                                                                                                                                                  $0.89                               $(0.12)                                 $0.05                                  $0.11                                $0.93
                                                                                                                                                                                                =====                               ======                                  =====                                  =====                                =====

                                                                                                                                                                                 Three Months Ended November 30, 2011
                                                                                                                                                                                 ------------------------------------
                                                                                                                                                                               GAAP                                                                                                            Cash Earnings                           Cash Earnings
                                                                                                                                                                                                                                                                                               Adjustments(1)
                                                                                                                                                                                                                                                                                               -------------

    Revenues                                                                                                                                                                                 $530,505                                                                                              $                   -                             $530,505
    --------                                                                                                                                                                                 --------                                                                                              ---------------------                             --------

    Operating expenses:
       Cost of service                                                                                                                                                                        185,931                                                                                                            (12,153)                             173,778
       Sales, general and administrative                                                                                                                                                      247,994                                                                                                                  -                              247,994
                                                                                                                                                                                              433,925                                                                                                            (12,153)                             421,772
                                                                                                                                                                                              -------                                                                                                            -------                              -------

    Operating income                                                                                                                                                                           96,580                                                                                                             12,153                              108,733
    ----------------                                                                                                                                                                           ------                                                                                                             ------                              -------

    Other income (expense):
       Interest and other income                                                                                                                                                                2,259                                                                                                                  -                                2,259
       Interest and other expense                                                                                                                                                              (4,878)                                                                                                                 -                               (4,878)
                                                                                                                                                                                                                                                                                                                     ---                               ------
                                                                                                                                                                                               (2,619)                                                                                                                 -                               (2,619)
                                                                                                                                                                                               ------                                                                                                                ---                               ------

    Income before income taxes                                                                                                                                                                 93,961                                                                                                             12,153                              106,114
    Provision for income taxes                                                                                                                                                                (25,812)                                                                                                            (3,757)                             (29,569)
                                                                                                                                                                                              -------                                                                                                             ------                              -------
    Net income                                                                                                                                                                                 68,149                                                                                                              8,396                               76,545
    Less: Net income attributable to noncontrolling interests, net of tax                                                                                                                      (6,968)                                                                                                            (1,945)                              (8,913)
                                                                                                                                                                                               ------                                                                                                             ------                               ------
    Net income attributable to Global Payments                                                                                                                                                $61,181                                                                                                             $6,451                              $67,632
                                                                                                                                                                                              =======                                                                                                             ======                              =======

    Diluted shares                                                                                                                                                                             78,876                                                                                                                                                  78,876
    Diluted earnings per share                                                                                                                                                                  $0.78                                                                                                              $0.08                                $0.86
                                                                                                                                                                                                =====                                                                                                              =====                                =====

    (1)Represents adjustments to cost of service to exclude acquisition intangible amortization expense and the related income tax benefit.

    (2)Represents HSBC's share of GPAP dividends declared.

    We supplemented our reporting of net income and the related earnings per share information determined in accordance with GAAP by reporting net income and the related earnings per share for the three months ended November 30, 2012 and 2011 on a "cash earnings" basis in this earnings release as a measure to help evaluate
     performance. We calculated November 30,2012 net income and earnings per share on a cash basis by excluding credits related to the processing system intrusion and acquisition intangible amortization. We also adjusted the net income attributable to noncontrolling interests to include HSBC's share of second quarter 2013 GPAP
     net income. We calculated November 30, 2011 net income and earnings per share on a cash basis by excluding acquisition intangible amortization from our results. We exclude these items in order to more clearly focus on the factors we believe are pertinent to the daily management of our operations. Our net income and earnings
     per share reported on a cash earnings basis should be considered in addition to, and not as a substitute for, net income and earnings per share determined in accordance with GAAP. Our measures of net income and earnings per share on a cash earnings basis reflect management's judgment of particular items, and may not be
     comparable to similarly titled measures reported by other companies.

    SCHEDULE 7
    RECONCILIATION OF YEAR TO DATE CASH EARNINGS ATTRIBUTABLE TO GLOBAL PAYMENTS TO GAAP
    GLOBAL PAYMENTS INC. AND SUBSIDIARIES

    (In thousands, except per share data)
    ------------------------------------

                                                                                                                                                                Six Months Ended November 30, 2012
                                                                                                                                                                ----------------------------------
                                                                                                                                                                               GAAP                                 Processing                              Other(2)                            Cash Earnings                           Cash Earnings
                                                                                                                                                                                                                      System                                                                    Adjustments(1)
                                                                                                                                                                                                                     Intrusion
                                                                                                                                                                                                                     ---------

    Revenues                                                                                                                                                                               $1,178,825                  $                  -                   $                  -                  $                   -                             $1,178,825
    --------                                                                                                                                                                               ----------                  --------------------                   --------------------                  ---------------------                             ----------

    Operating expenses:
       Cost of service                                                                                                                                                                        414,659                                     -                                   (161)                               (25,561)                               388,937
       Sales, general and administrative                                                                                                                                                      557,596                                     -                                   (800)                                     -                                556,796
       Processing system intrusion                                                                                                                                                              9,500                                (9,500)                                     -                                      -                                      -
                                                                                                                                                                                              981,755                                (9,500)                                  (961)                               (25,561)                               945,733
                                                                                                                                                                                              -------                                ------                                   ----                                -------                                -------

    Operating income                                                                                                                                                                          197,070                                 9,500                                    961                                 25,561                                233,092
    ----------------                                                                                                                                                                          -------                                 -----                                    ---                                 ------                                -------

    Other income (expense):
       Interest and other income                                                                                                                                                                4,170                                     -                                      -                                      -                                  4,170
       Interest and other expense                                                                                                                                                             (18,154)                                    -                                  8,383                                      -                                 (9,771)
                                                                                                                                                                                                                                        ---                                  -----                                    ---                                 ------
                                                                                                                                                                                              (13,984)                                    -                                  8,383                                      -                                 (5,601)
                                                                                                                                                                                              -------                                   ---                                  -----                                    ---                                 ------

    Income before income taxes                                                                                                                                                                183,086                                 9,500                                  9,344                                 25,561                                227,491
    Provision for income taxes                                                                                                                                                                (53,553)                               (3,279)                                (1,533)                                (7,573)                               (65,938)
                                                                                                                                                                                              -------                                ------                                 ------                                 ------                                -------
    Net income                                                                                                                                                                                129,533                                 6,221                                  7,811                                 17,988                                161,553
    Less: Net income attributable to noncontrolling interests, net of tax                                                                                                                     (12,675)                                    -                                 (3,594)                                (2,902)                               (19,171)
                                                                                                                                                                                              -------                                   ---                                 ------                                 ------                                -------
    Net income attributable to Global Payments                                                                                                                                               $116,858                                $6,221                                 $4,217                                $15,086                               $142,382
                                                                                                                                                                                             ========                                ======                                 ======                                =======                               ========

    Diluted shares                                                                                                                                                                             79,062                                                                                                                                                     79,062
    Diluted earnings per share                                                                                                                                                                  $1.48                                 $0.08                                  $0.05                                  $0.19                                  $1.80
                                                                                                                                                                                                =====                                 =====                                  =====                                  =====                                  =====

                                                                                                                                                                Six Months Ended November 30, 2011
                                                                                                                                                                ----------------------------------
                                                                                                                                                                               GAAP                                                                                                      Cash Earnings Adjustments(1)                   Cash Earnings
                                                                                                                                                                               ----                                                                                                      ---------------------------                    -------------

    Revenues                                                                                                                                                                               $1,073,276                                                                                               $                   -                             $1,073,276
    --------                                                                                                                                                                               ----------                                                                                               ---------------------                             ----------

    Operating expenses:
       Cost of service                                                                                                                                                                        377,467                                                                                                             (24,796)                               352,671
       Sales, general and administrative                                                                                                                                                      490,619                                                                                                                   -                                490,619
                                                                                                                                                                                              868,086                                                                                                             (24,796)                               843,290
                                                                                                                                                                                              -------                                                                                                             -------                                -------

    Operating income                                                                                                                                                                          205,190                                                                                                              24,796                                229,986
    ----------------                                                                                                                                                                          -------                                                                                                              ------                                -------

    Other income (expense):
       Interest and other income                                                                                                                                                                4,760                                                                                                                   -                                  4,760
       Interest and other expense                                                                                                                                                              (8,965)                                                                                                                  -                                 (8,965)
                                                                                                                                                                                                                                                                                                                      ---                                 ------
                                                                                                                                                                                               (4,205)                                                                                                                  -                                 (4,205)
                                                                                                                                                                                               ------                                                                                                                 ---                                 ------

    Income before income taxes                                                                                                                                                                200,985                                                                                                              24,796                                225,781
    Provision for income taxes                                                                                                                                                                (60,755)                                                                                                             (7,496)                               (68,251)
                                                                                                                                                                                              -------                                                                                                              ------                                -------
    Net income                                                                                                                                                                                140,230                                                                                                              17,300                                157,530
    Less: Net income attributable to noncontrolling interests, net of tax                                                                                                                     (15,075)                                                                                                             (4,010)                               (19,085)
                                                                                                                                                                                              -------                                                                                                              ------                                -------
    Net income attributable to Global Payments                                                                                                                                               $125,155                                                                                                             $13,290                               $138,445
                                                                                                                                                                                             ========                                                                                                             =======                               ========

    Diluted shares                                                                                                                                                                             79,831                                                                                                                                                     79,831
    Diluted earnings per share                                                                                                                                                                  $1.57                  $                  -                   $                  -                                  $0.18                                  $1.73
                                                                                                                                                                                                =====                  ====================                   ====================                                  =====                                  =====

    (1)Represents adjustments to cost of service to exclude acquisition intangible amortization expense and the related income tax benefit.

    (2)Represents HSBC's share of GPAP dividends declared and one-time charges primarily related to employee termination benefits.

    We supplemented our reporting of net income and the related earnings per share information determined in accordance with GAAP by reporting net income and the related earnings per share for the six months ended November 30, 2012 and 2011 on a "cash earnings" basis in this earnings release as a measure to help evaluate
     performance. We calculated November 30,2012 net income and earnings per share on a cash basis by excluding costs related to the processing system intrusion, acquisition intangible amortization and one-time charges related to employee termination benefits. We also adjusted the net income attributable to noncontrolling
     interests to include HSBC's share of August 2012 through November 2012 GPAP net income. We calculated November 30, 2011 net income and earnings per share on a cash basis by excluding acquisition intangible amortization from our results. We exclude these charges in order to more clearly focus on the factors we believe are
     pertinent to the daily management of our operations. Our net income and earnings per share reported on a cash earnings basis should be considered in addition to, and not as a substitute for, net income and earnings per share determined in accordance with GAAP. Our measures of net income and earnings per share on a cash
     earnings basis reflect management's judgment of particular items, and may not be comparable to similarly titled measures reported by other companies.
    SCHEDULE 8
    RECONCILIATION OF CASH EARNINGS SEGMENT INFORMATION TO GAAP
    GLOBAL PAYMENTS INC. AND SUBSIDIARIES

    (In thousands)
    -------------

                                                                                                                                                                        Three Months Ended November 30,
                                                                                                                                                                       -------------------------------
                                                                                                                                                                                                   2012                                                                            2011
                                                                                                                                                                                                   ----                                                                            ----
                                                                                                                                                GAAP                             Processing                             Other                                   Cash                                  Cash Earnings                                       GAAP                                             Cash                                  Cash Earnings
                                                                                                                                                                                   System                                                                     Earnings                                                                                                                                   Earnings
                                                                                                                                                                                 Intrusion                                                                 Adjustments(1)                                                                                                                             Adjustments(1)
                                                                                                                                                                                 ---------                                                                  -------------                                                                                                                              -------------

                     Revenues:
                     ---------
                     United States                                                                $339,998  $                -                  $                -            $                       -                            $339,998                                                                            $293,416                             $                       -                                    $293,416
                     Canada                                                        80,770                                   -                                   -                                    -                              80,770                                                                              85,521                                                     -                                      85,521
                                                                                                                          ---                                 ---                                  ---                                 ---                                                                                                                                                                                   ---
                      North America merchant
                      services                                                   420,768                                   -                                   -                                    -                             420,768                                                                             378,937                                                     -                                     378,937

                     Europe                                                       131,161                                   -                                   -                                    -                             131,161                                                                             115,169                                                     -                                     115,169
                     Asia-Pacific                                                  36,609                                   -                                   -                                    -                              36,609                                                                              36,399                                                     -                                      36,399
                                                                                                                          ---                                 ---                                  ---                                 ---                                                                                                                                                                                   ---
                      International merchant
                      services                                                   167,770                                   -                                   -                                    -                             167,770                                                                             151,568                                                     -                                     151,568

                                        Total revenues                                            $588,538  $                -                  $                -            $                       -                            $588,538                                                                            $530,505                             $                       -                                    $530,505
                                                                                                  ========  ==================                  ==================            =========================                            ========                                                                            ========                             =========================                                    ========

                     Operating income:
                     -----------------
                     North America merchant services                                              $67,114  $                -                                                                   $6,166                             $73,280                                                                             $70,673                                                 $2,822                                     $73,495
                     International merchant services                              53,987                                   -                                                                    8,170                              62,157                                                                              44,494                                        9,331    53,825
                     Corporate                                                     (4,519)         (14,489)                                                      -                              (19,008)                                                                        (18,587)                                                                                  -  (18,587)
                     Operating income                                                            $116,582            $(14,489)                 $                -                              $14,336                            $116,429                                                                             $96,580                                                $12,153                                    $108,733
                                                                                                 ========            ========                  ==================                              =======                            ========                                                                             =======                                                =======                                    ========

                                                                                                                                                                       Six Months Ended November 30,
                                                                                                                                                                      -----------------------------
                                                                                                                                                                                                   2012                                                                            2011
                                                                                                                                                                                                   ----                                                                            ----
                                                                                                                                                GAAP                    Processing System Intrusion                   Other(2)                      Cash Earnings Adjustments(1)                      Cash Earnings                                       GAAP                                 Cash Earnings Adjustments(1)                      Cash Earnings
                                                                                                                                               ----                     ---------------------------                    -------                       ---------------------------                      -------------                                      ----                                   ---------------------------                      -------------

                     Revenues:
                     ---------
                     United States                                                                $685,896  $                -                  $                -            $                       -                            $685,896                                                                            $580,841                             $                       -                                    $580,841
                     Canada                                                       161,667                                   -                                   -                                    -                             161,667                                                                             176,742                                                     -                                     176,742
                                                                                                                          ---                                 ---                                  ---                                 ---                                                                                                                                                                                   ---
                      North America merchant
                      services                                                   847,563                                   -                                   -                                    -                             847,563                                                                             757,583                                                     -                                     757,583

                     Europe                                                       259,626                                   -                                   -                                    -                             259,626                                                                             244,583                                                     -                                     244,583
                     Asia-Pacific                                                  71,636                                   -                                   -                                    -                              71,636                                                                              71,110                                                     -                                      71,110
                                                                                                                          ---                                 ---                                  ---                                 ---                                                                                                                                                                                   ---
                      International merchant
                      services                                                   331,262                                   -                                   -                                    -                             331,262                                                                             315,693                                                     -                                     315,693

                                        Total revenues                                          $1,178,825  $                -                  $                -            $                       -                          $1,178,825                                                                          $1,073,276                             $                       -                                  $1,073,276
                                                                                                ==========  ==================                  ==================            =========================                          ==========                                                                          ==========                             =========================                                  ==========

                     Operating income:
                     -----------------
                     North America merchant services                                             $134,331  $                -                                $905                               $9,487                            $144,723                                                                            $142,431                                                 $5,680                                    $148,111
                     International merchant services                             111,127                                   -                                   -                               16,074                             127,201                                                                             100,152                                       19,116   119,268
                     Corporate                                                    (48,388)           9,500                  56                                   -                              (38,832)                                                                        (37,393)                                                                                  -  (37,393)
                     Operating income                                                            $197,070              $9,500                                $961                              $25,561                            $233,092                                                                            $205,190                                                $24,796                                    $229,986
                                                                                                 ========              ======                                ====                              =======                            ========                                                                            ========                                                =======                                    ========

    1 Represents acquisition intangible amortization expense.

    2 Represents one-time charges primarily related to employee termination benefits.

    SCHEDULE 9
    OUTLOOK SUMMARY
    GLOBAL PAYMENTS INC. AND SUBSIDIARIES

    (In millions, except per share data)
    -----------------------------------

                                                                                                                                                                     Fiscal 2012                                                         Fiscal 2013                                      % Change
                                                                                                                                                                       Actual                                                              Outlook                                          FY12
                                                                                                                                                                       ------                                                              -------                                          ----

                                    Revenue Outlook
                                    ---------------
                                    Constant currency(1)                                                                                         $2,204                                                $2,385 to $2,425                                             8% to 10%
                                    Foreign currency impact(2)                                                     NA                                                                ($25)

                                    Total Revenues                                                                                               $2,204                                                $2,360 to $2,400                                              7% to 9%

                                    EPS Outlook
                                    -----------
                                    Constant currency(1)                                                                                          $3.53                                                  $3.69 to $3.76                                              5% to 7%
                                    Foreign currency impact(2)                                                     NA                                                              ($0.08)

                                    Cash EPS                                                                                                      $3.53                                                  $3.61 to $3.68                                              2% to 4%
                                     Acquisition-related intangibles and non-
                                     recurring items (3)                                                        (0.48)                                                             ($0.60)                           25%
                                    Processing system intrusion                                                 (0.68)                                                 TBD*                                   NM

                                    GAAP Diluted EPS                                                                                              $2.37                                                  $3.01 to $3.08                                            27% to 30%

    We supplement our fiscal 2013 outlook of total revenues and earnings per share information determined in accordance with GAAP by reporting revenues and earnings per share on a "constant currency" basis in this earnings release as a measure to help evaluate performance.
     We calculated revenues and earnings per share on a constant currency basis by converting our fiscal 2013 expected revenues and expenses at fiscal 2012 exchange rates.  We exclude the impact of exchange rate fluctuations in order to more clearly focus on the factors we
     believe are pertinent to the daily management of our operations, and our management uses constant currency measures to evaluate the impact of operational business decisions.  Our revenues and earnings per share reported on a constant currency basis should be considered
     in addition to, and not as a substitute for, revenues and earnings per share determined in accordance with GAAP. Our measures of revenues and earnings per share on a constant currency basis reflect management's judgment of particular items, and may not be comparable to
     similarly titled measures reported by other companies.

    1 Reflects current period and forecasted results on a pro forma basis as if foreign currency rates did not change from the comparable prior year period.

    2 Reflects the impact of actual and forecasted changes in foreign currency rates from the comparable prior year period.

    3 Fiscal 2013 reflects $0.56 of acquisition-related intangibles and $0.04 of non-recurring items.  Acquisition-related intangibles accounted for $0.35 in fiscal 2012 and non-recurring items $0.13.

    * Not able to accurately estimate 2013 charges for processing system intrusion, remediation, true-ups, etc. We currently anticipate that such additional costs may be $25 to $35 million in fiscal 2013 which reflects a $31.5 million reduction of the company's original
     estimate of fraud losses, fines and other charges resulting in total processing system intrusion costs for six months ended November 30, 2012 of $9.5 million.  Insurance proceeds of up to $28 million may possibly occur in fiscal 2014 rather than 2013.

    NA=Not Applicable
    NM=Not Meaningful

SOURCE Global Payments Inc.


Source: PR Newswire